Jet charter: is it right for you and your business?

A Q&A WITH RICHARD HODKINSON

Q: Who is the ideal candidate for private jet charter?

Anyone who's time is of great value, or just wants to experience the ultimate luxury in jet charter. More and more individuals and companies are recognizing that private jet charter is not just a luxury, in fact it is a very efficient business tool. It is, in many investor's and stock holder's best interests for a company to use a private jet under certain circumstances allowing that individual's time, which is of great value to those investors and stock holders, to be used in the most effective way.

Q: Should I own or charter?

That really depends on what your utilization is. If you are utilizing air charter and you are near the hub of where there is ample charter lift available, such as any of the big cities in the United States, then normally you would not need to purchase until you are chartering at least 200 hours a year. It would also be dependant on the type of flying you do. This is something you could pencil out with a charter provider or/and management company. We would do a detailed analysis, look at your profile, and show you what makes more sense: purchasing or charter.

Q: If I decide to buy, who should handle the search and acquisition for me?

There are a lot of brokers out there, but few of them have your best interest at heart. If it were my money, I would definitely go after a company such as ours to help me in the acquisition and search. A good charter company's involvement in the deal is from a more long-term perspective. We look at the aircraft from an operational standpoint and from a long-term budgetary standpoint. A broker typically looks at it from the standpoint of getting you through the sale, earning their commission, and then you are on your own to deal with whatever eventuality may or may not be a result of the purchase. We handle it in such a way as to cam our fee by representing you, the buyer. A broker typically finds an aircraft where they make the most money from the seller on the backside of the deal. It's hard for them to have your best interest at heart and make unbiased decisions with this type of deal-making situation.

Q: What are the criteria for choosing?

I would make sure that you are looking at a company that is independently audited by the leading industry auditors such as Wyvern and ARG/US. The company you chose should hold the highest ratings from those companies. In my mind, a stable workforce, which leads to continuity and knowledge of each aircraft is also critical to everyone's decision-making process.

Q: Where does the ability of a company to purchase fuel at more advantageous prices than others come into play?.

It simply is important to buy fuel at a substantial discount; it is irresponsible not to. The best charter companies have an entire department whose sole function is to negotiate and purchase discounted fuel In addition to the aircraft being directly managed by the charter, additional aircraft on a Fuel Purchase Program can help all the owners because the buying power enables the charter company to secure fuel at the lowest possible prices. The bottom line is that jet fuel is the single biggest part of the pie when it comes to the direct operating cost of an aircraft That is to say that for every hour you fly the aircraft, the biggest expense is fuel And therefore, the more you can lower the price of fuel, the more significant the savings you pass on to the client

Q: What are the tax advantages and implications of owning your own jet?

Many companies are in a position to depreciate their aircraft purchase over a 5-7 year period, depending on the justification of that aircraft within their company. We certainly have helped numerous individuals and companies purchase aircraft and help them ultimately receive a discount through tax advantages. However, we normally consult with that individual or company's tax advisers to help them maximize their available tax benefits. We don't function as a tax advisor. Further, through our chartering the aircraft and our broad-based experience, we can help the client offset any sales tax when purchasing the aircraft

Q: Given that the FAA regulates all aviation, and sets the standards for safety, aren't all jet charter companies the same?

Not at all. The government regulates restaurants as well. They regulate many other things such as taxi cabs, limousines and airlines. We all experience the differences in service. If you look, a lot of restaurants have health ratings of "A'S" on their windows, but you can tell by walking into the restaurant working with the employees, talking with the employees how consistent they are, or are not, with their level of service. Watch the staff carefully, see if they do what they are really suppose to do as it relates to health, safety, and service. It's the same way in any service business. A lot of companies look for short cuts, and a few companies do it right.

Q: What is "Block Charter,", and when is it a viable consideration?

I think it's viable for anyone who has any significant amount of charter at all. If you are flying more than 50 hours a year, you really should work to negotiate a block charter purchase with a charter company. Here's why. Part of the appeal is to take advantage of discounted charter rates. Everybody wants to save money, and reduce their cost for jet transportation. But in addition, and I think every bit as important is that you become a member of a select group within that organization.

Q: What's on the horizon in the world of private aviation that will affect current as well as prospective users?

As much as aviation has grown over the last 102 years, especially in the last 20 years, it's still very much in its infancy, There are approximately 13,000 general aviation aircraft out there today, and the industry will be adding several thousand a year over the next several years. So, you can see that the percentage of change over the next few years will exceed that of over the last 50 years. It's very exciting. Technology continues to play a large part There is a new breed of aircraft called "Very Light Jets" (VLJs) that are often flown by the aircraft owner, and as the VLJs integrate into the business world, they will change the public outlook and perception of jet travel. Jet travel is no longer a luxury for only a select few like it used to be. It is becoming more and more of a necessary business tool in order to operate effectively in the world. Just as the fax machine replaced the telex, email substantially the fax, so too will private jet aviation continue to erode the commercial aviation market.

Richard Hodkinson is president of Elite Aviation. For more information, please visit www.EliteAviation.com.